Top Global Payment Methods Compared: Cost, Speed, and Country Coverage

You can’t run a business without getting paid, and one of the easiest ways to do so is by offering as many payment methods as possible.

In this guide, we examine the top global payment methods, their pros and cons, and why it’s an important feature to offer customers.

To start, the following is a list of the top global payment methods a business can offer customers right now.

List of Payment Methods

• Credit cards, including Visa, Mastercard, and American Express
• PayPal
• TransferWise, Payoneer, Tipalti
• Wire transfer
• International ACH
• JCB card
• Maestro card

Managing each payment method so it’s secure, available, and reliable can be challenging. Tipalti estimates that there are over 26,000 global payment rules for paying suppliers in outside countries. Knowing the proper global method to use in a given situation is no small task.

Why a Business Needs Multiple Global Payment Methods

There are thousands of global payment rules for suppliers worldwide. The best payment method typically depends on the supplier’s location and expectations. 

A business needs multiple global payment methods because international vendors are looking for a flexible payment experience to best suit their needs. Each type has benefits and drawbacks that can affect both the satisfaction of suppliers and partners and the workload of your finance and accounts payable teams.

Offering a range of payment methods enables global payees to receive their funds on time, in their local currency, and via their preferred method. Managing all of these payments manually can be a headache for any business owner, but finding the right payout platform makes the job easier.

Giving people a wealth of cross-border payment methods shows payees that you prioritize their comfort and security. Mass payment platforms such as Tipalti enable thousands of payments to be made in minutes while keeping the payer in full tax and regulatory compliance.  

Additionally, paper checks are ubiquitous in supplier payments, but they’re far from adequate. Thankfully, from local bank transfers to international ACH and wire transfers, there is a world of options.

Types of Global Payment Methods

Wire Transfers

Wire transfers are an interbank payment method. They involve sending money directly from one bank account to another. 

A wire is the simplest global payment method because it requires no middleman to handle the transfer, and it’s also the fastest, as funds are received by the payee on the same day or within 1-2 business days.

Advantages of a Wire Transfer

Wire transfers are highly favored for their reliability and speed since they provide a direct connection from one bank account to another. They are also well equipped to handle the constant changes of cross-border transactions. 

Local regulations in each country require wire transfers to include specific authentication data. Therefore, a professional mass-payout provider can best serve the payer’s needs by using wire transfers.

Disadvantages of a Wire Transfer

It should be noted that wire transfers are the most expensive electronic method for remitting funds. There is usually a transaction fee for both the sender and the receiver, and intermediary bank fees may be charged as well. 

Also, should a payment fail, wire transfer failures can be more expensive to diagnose, often involving investigation and resubmission fees. 

Best Use Case

Wire transfers are best used with a payee who needs their money immediately, or who is receiving a large amount of remittance. Because fees can range from $20 to $100, the remittance amount should be reasonable.   

Wire transfers are a payment solution that works best for businesses making a high volume of payments per month, to many countries. 

Worst Use Case

Wire transfers should be avoided when the payee or beneficiary does not require funds immediately or when the transfer cost is a large proportion of the payment amount. Remember, you’re paying for the faster payment processing.  

United States ACH

ACH, or Automated Clearing House, is a network that handles large batches of debit and credit transactions electronically. Domestic ACH transfers are a convenient, reliable, and inexpensive local payment method. 

ACH requires knowledge of the payee’s bank account and ABA routing transit number (ABA RTN). In the United States, the Automated Clearing House (ACH) provides a cross-bank network for clearing and settling payments. It does so in batches, which can require several days for payments to clear at each bank. 

If you read about e-payments or e-checks, it’s likely a reference to ACH payments.

Same-day ACH

In September 2016, NACHA (National Automated Clearing House Association) began rolling out a same-day ACH for certain transactions that met specific requirements. To manually execute a high volume of mass ACH payments, batched instructions can be sent to the transmitting bank. 

This involves a programmatic interface directly with the bank or a file upload with all account information, and an understanding of the bank’s communication protocols. In case of error, a series of return codes is sent by the ACH network to identify the issue. This makes it one of the more secure payment options. 

Advantages of an ACH

ACH transfers are a cheap way to transfer funds between US bank accounts. It’s often free to send and receive ACH payments, and they’re safer than wire transfers. That’s because payments can be reversed. 

Setting up routine ACH payments also helps avoid missed or delayed bills. This makes ACH a more reliable payment service.

Disadvantages of an ACH

ACH transfers aren’t perfect, and there are drawbacks to consider. An ACH can take up to 4 days, and there are cut-off times for transactions each day. Missing these times will increase the time it takes to make a transfer. 

An ACH is a payment method that’s also limited for overseas transfers. Banks can set limits on the amount sent per account (by transaction, daily, weekly, or monthly). The law also limits transfers from savings accounts to 6 per month in new markets.

Best Use Case

Thanks to its ability to handle a high volume of payments, most large commercial businesses and government agencies use ACH as their primary payment method. 

More small business owners are also using this method to help employees and suppliers get their money fast and with minimal hassles. If your business requires payments to a large number of suppliers, ACH is the right choice. It’s also one of the more affordable alternative payment methods in the United States.

Worst Use Case 

Domestic ACH should be avoided when the payee or beneficiary requires funds immediately or does not have a bank account that offers direct deposit. Additionally, domestic ACH is not available for anyone outside of the US.

Global ACH

Global ACH, or International ACH, provides electronic funds transfer capabilities across dozens of countries, while payments are made in the payee’s local currency. Global ACH payments are sometimes called local bank transfers or direct to local bank transfers.

The same benefits that were until recently only available to domestic payees are now offered as a fast and efficient payout solution for suppliers, affiliates, publishers, and developers all over the world. 

These transfers are managed by the National Automated Clearing House Network (NACHA) and are required to follow all NACHA rules and standards, which include:

• All necessary identifying data for each party is provided
• Gateway operators must classify payments coming to and from financial institutions outside of the United States

For example, in Japan, the bank’s name is required for the transaction, and in India, an Indian Financial System Code (IFSC) is required. In Europe (Germany, Spain, Belgium, Luxembourg, the Netherlands, etc.), SEPA (Single Euro Payments Area) may be used. 

Latin America, Brazil, Poland, Asia Pacific, and various other parts of the world all have different banking systems. If you’re not sure, it’s time to make a few phone calls.

Advantages of a Global ACH

International ACH can be a convenient, reliable, and inexpensive global payment method if you understand the unique banking requirements of the country in question. It requires knowledge of the payee’s bank account and ABA routing transit number (ABA RTN).

Disadvantages of a Global ACH

To execute a high volume of global mass ACH payments, batched instructions must be sent to the transmitting bank, which may or may not have an interface to specific countries. If the bank cannot decipher this data, the ACH cannot process.

Additionally, if there is a processing error, the local banking network sends a series of return codes to identify the issue. Although there is no guarantee.

Best Use Case 

International ACH is best used when a payee is outside of North America, and there isn’t a need for immediate access, as it can take several days to clear. 

It is ideal for cost-conscious payees, as amounts tend to be lower and payments can be more frequent. It is also convenient for receiving funds in local currency (note that the destination country must have established and supported banking rules). 

Worst Use Case

For payees who reside in countries with limited banking infrastructure, international ACH methods are not an option. 

Additionally, a global ACH is not ideal for transactions that must be received immediately or within one day. International ACH methods are also a mismatch with suppliers who require paper checks. 

Paper Checks

Paper checks instruct a bank to transfer a specific amount from the bank account of one party (the payer) to another party (the payee). The payee can then cash the check or deposit it directly into their own bank account. 

Funds are not withdrawn until the payer’s bank receives the check, determines the drawer has money in their account, and releases the amount to the payee.

Usually, a central entity serves as a clearinghouse for all banks to process manual payments. In the United States, the Automated Clearing House (ACH) provides a cross-bank network for clearing and settling paper checks. It does so in batches, which can require several days for payments to clear at each bank. 

Advantages of Paper Checks

Paper checks are the most widely accepted form of payment. A business can print checks in-house and mail them straight off. 

To manually execute a high volume of paper checks, banks may also offer print check services where payments can be uploaded to the transmitting bank. This helps to digitize the entire process and works wonders for online payments.

Disadvantages of Paper Checks

The payer must have funds available for the bank to release payment. Because of the nature of mail, the paper check transaction process can take several days. Additionally, payments cannot be readily traced unless the whereabouts of the physical check is known.

Best Use Case

Paper checks are best used with a payee who is unable or unwilling to provide bank routing information or other means of payment and primarily only a mailing address is available. 

It is also ideal for cost-conscious payees who do not require funds immediately. In some countries, there is no market share for electronic payment methods, so paper checks are used. 

Worst Use Case

Paper checks are not a good choice if the payee doesn’t have the means to cash a check (e.g. a bank account or a third-party cash service). 

Additionally, paying with paper checks is suboptimal in countries where postal privacy, efficiency, and security are problematic, potentially leading to checks being stolen or going missing. Most corporate AP departments want to reduce or eliminate check payments because of their high labor costs, inefficiencies, and the risk of fraud they introduce.

PayPal

Sometimes called an e-wallet or digital wallet, PayPal is used for e-payments both domestically and internationally. It facilitates e-commerce, promotes online shopping, and streamlines online purchases. 

Funds are drawn from the payer’s account (usually via ACH) and loaded into their PayPal account. The payee can then use those funds to pay for goods and services that accept PayPal or transfer them to a bank account linked to PayPal. 

PayPal acts as a clearinghouse between parties, including ensuring funds are transferred to suitable users with good standing. Funds are usually received within minutes, but if there are issues, they may be held by PayPal. 

To manually execute a high volume of transactions, PayPal requires a payer to establish a PayPal Business account and use PayPal Payouts for mass payments. 

Payers sending mass payments this way pay a transaction fee (plus a percentage of the transaction for international payments). International payees may have to pay currency conversion and withdrawal fees. 

Advantages of a Paypal

PayPal is fast, secure, and easy to use. Once registered, users only need to provide payees’ email addresses to receive their money. This keeps bank information private, and users can choose whether they want to transfer the money to a bank account or keep it for credit online with stores like Amazon.

Disadvantages of Paypal

Some payees find the transaction fees a little high. Especially for mass global payments. Not all customers live in areas where PayPal can integrate with their bank accounts. If any information is missing, this payment method won’t work.

Best Use Case

PayPal is very active in digital communities, including online marketplaces, crowdsourcing, and other on-demand and sharing economies. Most of those payees have PayPal accounts so transactions are normally low-friction. The majority of established, regulated countries have support for PayPal. 

For mass payments, payers can receive and send invoices directly through the website. This option is best for business owners who work with many employees and freelancers and have customers who are concerned about giving out sensitive financial information.

Worst Use Case

For some communities and countries, PayPal is not a good fit, either because of reach (e.g., Pakistan) and banking issues, or because of regulatory issues.  

Is Consolidating Your Payment Methods a Good Idea?

When you decide to invest in a payout platform for your suppliers, you have the opportunity to decide whether you’ll limit your pay-out options to the most basic (e.g. PayPal or check), or offer a variety of payment methods. 

While most e-payment methods are supported by quality global payables platforms, some business owners decide to use only one payment method. This is done mainly to simplify operations in the accounts payable department and reduce workload.

This might seem like an easy way to save time tracking payments online, but one major problem with forcing your suppliers to use a single payment method, especially when making cross-border payments, is that some suppliers might not be happy with the method you choose. Thus, you risk losing or alienating business.

The best way to negotiate a change to your payout system is to ask your suppliers what they think of the idea before you do it. This will help identify issues before they happen. If one or more of your suppliers does not want to change methods, you can keep it uncomplicated with one payout system.

Each method requires a different path for collecting payment details, understanding payment rules, adding or editing data, and the actual funding and remittance operations. 

In some cases, different portals are required to interface with the various payment processors. The difficulties of managing multiple methods increase dramatically when making mass payments to suppliers and partners. 

Add this to the general ledger payment reconciliation complexity after payments are made and it’s no wonder that networks may limit payment methods.

How Tipalti Works with Global Payment Methods 

During the onboarding process, when payees select a payment method, Tipalti prompts them to enter an account number, any unique requirements for their country, and payment method of choice. 

Tipalti checks form fields to ensure the entries have the correct character count, format, and structure as required by that country. This reduces virtually all likelihood that payments will be rejected due to misinformation. 

The system always allows the payee to receive funds directly in their local currency (if available). Tipalti also offers payment thresholds, so they can decide when a wire transfer is cost-effective. 

Payers can determine how much (if any) fees are passed to the payee. To streamline bank communications, Tipalti directs all payments at once through various payment method interfaces. The payer does not have to directly communicate with the bank(s) or access any banking portals for remittance. Funds are pushed into the payee’s designated bank account. 

Should issues arise (such as the wrong account information or a frozen account), Tipalti stops payment and interprets any banking errors into standard, easy-to-understand alerts. 

If the payee can correct the condition, they are automatically sent a branded email on behalf of the payer with information on how to correct the problem.  

Summing Things Up

Supporting multiple international payment methods might seem complicated, but handling mass payments on a single platform will keep your business secure, up to date, and payee-friendly.

You may also be interested in:

Echecks: Efficient Global B2B Payment Methods 

Automated Invoice Processing Software: What is it and How Does it Work?

TIN Matching: Common Pitfalls to Avoid

ACH vs. Wire